After reporting a profit of $2.6 million in the third quarter, Pacific Continental Corp. in Eugene, Ore., is projecting a loss in the fourth quarter as result of expected writedowns on certain real estate loans.
The $1.3 billion-asset company said Monday that it will aside between $6 million and $7 million for loan losses in the quarter to reflect recent appraisals on loans that are no longer accruing interest and that, as a result, it expects to report a loss of between two and seven cents per share.
In the third quarter, Pacific Continental recorded a loan-loss provision of $1.8 million and earned 14 cents per share —
In a news release, the company said that the increased provision in the fourth quarter is related primarily to a single loan originated in 2008 and secured by 156 acres of undeveloped land in an industrial zone near Seattle.
A recent appraisal concluded that the value of the land has declined by 36% in the last year and 61% since 2007. The loan was moved to nonaccrual status earlier this year and Pacific Continental said it intends to write it off in the amount of $5.3 million this quarter.
The company, which has 14 offices in Oregon and Washington, also said it intends to write down the value of a loan by $640,000 on an undeveloped parcel outside or Portland, Ore.
"The overall credit quality and statistics related to our loan portfolio have improved significantly during 2011, however certain risks are still apparent, particularly as it relates to loans secured by undeveloped commercial and residential land," Hal Brown, Pacific Continental's chief executive, said in a news release. He added, however, that exposure to future such losses are "somewhat limited" because the bank has just $21 million in land development loans in its portfolio.
